Independence
A growing number of firms will hand an independent adviser a complete back office in exchange for one thing: you stop being your own registered investment adviser and become part of theirs.
A growing number of firms will give an independent adviser a full back office — operations, compliance, technology, marketing, sometimes a marketing budget and a recruiting team — in exchange for one thing. You stop being your own registered investment adviser and become part of theirs.
You usually keep your brand. You usually keep your clients and your investment approach. What changes is whose registration your advice is given under, and that single change carries most of the consequences.
The registration. Your firm's Form ADV either goes away or becomes a shell. The advice is given under their ADV, on their disclosures, under their policies. Their examination is your examination.
Supervision. Their chief compliance officer sets what you may say, what you may recommend, what you may hold, and which outside activities you may keep. Firms describe this as freedom with support. It is genuine support and it is not freedom.
The economics. Your revenue arrives as a share, on their schedule, under their grid. Grids change. Yours will change at least once.
What is my firm worth on the day I want to leave?
An independent RIA with its own registration, its own client agreements and its own history is an asset. It can be sold, merged, borrowed against, or handed to a successor. A book of business inside someone else's registration is generally none of those things — it is a revenue stream governed by an agreement, and the agreement will say what happens to it.
Read that clause before anything else. Not the grid, not the technology demonstration. The clause that says what you take with you.
It is not a bad deal. For some advisers it is clearly the right one.
You do not want to own a business. You want to advise people and be paid well for it, and the administrative half was never the point. That is an honest position and joining is the cleanest route to it.
You are early. A newer adviser without infrastructure, without staff and without a compliance budget gets more from joining than from building.
You are near the end. If you are five years from retiring with no successor, folding into a larger firm may be a better outcome than a rushed sale.
If you left a large firm specifically to own something, joining another one returns you to the position you left — with better software.
The operational relief is real and it is available without giving up the registration. Outsourcing the work and outsourcing the firm are two different transactions, and they are frequently presented as one.
Whose ADV am I on? Everything follows from the answer.
What do I own at the end? Ask for it in writing, and ask specifically what happens to client relationships if you leave.
What can I not do here? Every firm has a list — investments they will not permit, outside activities they will not approve, things they will not let you say. Ask for the list rather than the philosophy.
The problem an adviser usually wants solved is that running the operation has taken over the practice. That problem has more than one solution, and they are not equivalent.
You can hand over the work and keep the firm. Or you can hand over the firm and get the work handled as part of the arrangement. Both are legitimate. Only one of them still has your name on the registration in ten years.
What an independent firm is actually worth →
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